Posts Tagged ‘Cloud Computing’

With Web 2.0 Ad funded sites going out of fashion subscription based services are on the rise. Setting the right pricing for your SaaS and Web App service is a difficult decision. It is also a critical choice. Get it wrong with high prices and you could be losing out on sales. Running with very low prices may result in too many low profit customers. The secret is in knowing your customers and competition.

Cost Plus – Conventional wisdom says price on variable sales costs. However this is more of a resell/retail approach. Operational costs per additional SaaS/Web app customer tends to be very low. It’s the customer acquisition and developing new features that requires the high investments.

Match the Competition – Don’t worry about the costs. Price the service the same as your competitors and move their customers across to your service. Unfortunately this strategy offers limited differentiation and thus customers won’t move. If you don’t have any competitors check that there is a market in the gap.

Undercut the Competition – Start a price war and storm the market! This may grab the attention of some budget conscious customers. Unfortunately if it does work the impact does not last long. This strategy also leaves less money for acquiring new customers and future product developments.

Price Higher than Competitors - If your service is very similar to your direct competitors charge slightly more than them. Then focus on being a quality service. However you’ll have do something much better than your competitor. Find a feature or service level that the customer really values and your competitor is weak at.

Differentiate – Build a very different feature set and charge much more than your competitors. The challenge is you’ve got to have an outstanding service that fits a need. Your business message also needs to be very strong to justify the higher price.

Hide Your Prices – Many modern SaaS services such as TactileCRM and Freshbooks, etc publish all their prices. Some, like Echosign, have a salesforce to sell the service. Others let the service sell itself. If you don’t publish your pricing your salespeople can upsell the service levels when the customer comes calling. Pricing is often hidden this way in the corporate world of software.

Segment - Offer several service level to suite different customer types. Huddle and DNS Made Easy offer and range of service levels for small businesses and corporate customers. The pricing on these service levels varies a great deal.

Like I said it’s not easy. A mixture of the above pricing strategies may be the answer. A lot of the decision relies on knowing the market well i.e. the customers and the competitors. Choose a price strategy early on, test the market, and be flexible. A word of warning: it’s much easier to decrease prices than to increase them. Good luck!

As you can imagine the subject of website downtime/slowdowns is very close to my heart. Our startups new app monitors websites for uptime and performance. The full impact of Website downtime has just really hit me. This week part of The Pitch website frustratingly went down. On the same day the premier Web host provider Rackspace had a full hours outage which impacted many, many websites. These failures got me thinking. How common is downtime and what are the downstream effects for both ecommerce and SaaS apps/sites?

Also 84% of online consumers share negatives experience’s with others (Harris). Many of these problems are technical and performance related. A reputation which took considerable effort to establish can vanish overnight. The downtime message spreads at the speed of light through Twitter across 10’s millions of users. You can become known for being unreliable.

I’ve done some routing around to find evidence of how common website downtime is. According to Pingdom the average website is down for two hours per month!! That could be alot of visitors or customers lost. Sainburys, a leading UK supermarket, website was down for three hours during one day last year and at various other times. A large number of customers were tracked immediately moving from Sainburys to a competitor.

At the heart of Apple’s iPhone success is the App Store and iTunes. Apple is successfully up-ending how music is distributed and how mobile phones are used. Microsoft’s poor financial results also follows the closing down of Microsoft Encarta last month. Microsoft gave up the fight because its traditional software could no longer compete with the likes of Wikipedia. The good and bad news keeps coming thick and fast. Only two months ago the SaaS CRM provider Salesforce.com reported a 34% increased in revenues and broke the philological $1b revenue barrier.

Is the latest title Cloud Computing a case of ‘Old wine in new bottles’? Perhaps it is. However technology has now enabled the old Bureau type services to be delivered with the rich GUI we have now come to expect from our PC’s and Mac’s. Cloud Computing – A new service 50 years in the making :)

About me

My name's Nick Barker. I'm the CEO and co-founder of a Tech startup - Aware Monitoring. My passions are the Tech industry, road biking and great big adventures. I'm a reflector and this is my personal blog. Find me on Twitter here and Click for more about me..